State market watch - Victoria

01 November 2017

Each month MLA will focus on the market in a specific state. In this edition we focus on Victoria, where spring has seen continued high prices for lamb.

Sheep

Prices

Spring is normally associated with an influx of lambs and a subsequent decline in price. This however hasn’t been the case for 2017. The Victorian trade lamb indicator has ranged between 595¢ and 626¢/kg cwt since the beginning of September, up 2% on year-ago levels. Contributing to this is a greater presence of buyers from NSW, with the dry and patchy seasonal conditions across the state limiting supply and drawing buyers south. The market conditions have seen new and old season lamb saleyard indicators consistently track above the spring seasonal lows in price for the last five consecutive years.

The Bendigo and CVLX Ballarat selling centres in particular have seen a higher proportion of lighter lambs (less than 22kg cwt) sold to processors in September and October, when compared to 2016. This reflects the dry conditions during winter in some areas, which induced the higher turn off of young lambs earlier this year and, in turn, reduced the available supply of heavier stock.

Slaughter

Spring lamb slaughter in Victoria - as of 20 October - was approximately 1.4 million head, 22% higher than the same period last year. Mutton slaughter also increased to almost 336,000 head, up 60% year-on-year.

The June MLA and AWI wool and sheepmeat survey indicated that a larger proportion of producers intended to increase their ewe flock, but fewer aimed to achieve this by retaining older ewes. This, combined with producers opting instead to retain a greater number of replacement ewes, is likely to see more cull ewes coming through the system.

Throughput

Lamb and sheep saleyard throughput in Victoria totalled almost 526,500 head for spring so far (1 September to 24 October), up 15% vs 2016. The overall rise in numbers has been driven by a 19% increase in lambs yarded, to just over 336,000 head.

The spring lamb flush in Victoria has been particularly evident at CVLX Ballarat. Young lamb numbers have increased by 49% on 2016 levels, totalling 87,000 head for spring thus-far. Over a third of the state’s sheep throughput was consigned to Bendigo, with almost 130,500 new season lambs sold as of 24 October, increasing by 27% year-on-year. Good rainfall across parts of the state over winter drove this increase, in contrast to the rest of the country which recorded one of the driest winters on record.

Cattle

Prices

On the back of widespread rainfall, particularly in Queensland, Australian saleyard cattle prices lifted throughout September and into October. However, Victorian cattle prices, lacking the support of restockers and feeder buyers, have been selling at a discount compared to that of NSW and Queensland for much of the spring. The market also remains below the record highs of 2016, with yearling steers in Victoria averaging 22% lower year-on-year, on 267¢/kg for spring-to-date, while cows averaged 202¢/kg, back 14% year-on-year.

The lack of restocker demand in the market is mainly due to the near full recovery of Victorian herd numbers from the liquidation that peaked in 2015. Consequently, the availability of light weight store cattle being yarded across the state has been limited.

Slaughter

Further illustrating the recovery in the Victorian cattle herd is the 13% year-on-year increase in the total number of cattle processed for spring-to-date (week ending 20 October), totalling 146,681 head. The increase mostly consisted of males, with a more consistent proportion of females being killed as the dairy herd liquidation slows. During spring, weekly slaughter in Victoria has remained consistently above 20,000 head.

Throughput

More than 57,000 head have been yarded across Victorian selling centres during September and October, back 14% from year-ago levels. Saleyard consignments were considerably reduced during September, with 23,679 head yarded, back 22% from 2016. Wet weather impacted supply, particularly in southern Victoria, where improved pasture availability resulted in producers retaining stock. Spring to-date throughput at NVLX Barnawartha totalled 15,546 head, while 9,047 head were yarded at Shepparton and Leongatha offered a total of 7,214 head – similar to year-ago levels.